Worrying signs are emerging of rising wage pressures in the euro zone, European Central Bank Executive Board member Gertrude Tumpel-Gugerell said in a speech text released today.
Mr Tumpel-Gugerell said the ECB was determined to prevent a wage-price spiral from taking hold, noting an acceleration in euro zone wages in the first quarter.
Her warning was backed by fellow policymaker Jose Manuel Gonzalez-Paramo, who also pointed to risks of knock-on inflation effects and urged moderation in wage settlements.
"We still have no signs of broadly-based second-round effects in the euro zone as a whole," Ms Tumpel-Gugerell said in the speech to a Friedrich Ebert Stiftung forum, according to a text published on the ECB's Website.
"But some first worrying signals coming from individual countries of increasing wage pressures, predominantly from the public sector, cannot be overlooked."
"Given the high capital utilisation, the continued tense labour market situation and the danger of second-round effects, it cannot be ruled out that future wage increases will turn out to be unexpectedly high."
Growth in hourly labour costs in the 15 countries using the euro accelerated to 3.3 per cent year-on-year in the first quarter, up from a 2.9 per cent in the fourth quarter of last year.
Negotiated wage growth picked up to 2.7 per cent, from 2.2 per cent, and the ECB has reported slackening productivity growth at the end of last year - a factor which it says should be kept in mind when negotiating wage rises.
The ECB has stressed its determination to prevent current record high inflation - fuelled by high oil prices - from feeding into inflation expectations and then wage and price developments, and shocked markets this month by saying it might raise interest rates from 4 per cent in July.
Ms Tumpel-Gugerell said current interest rates were on the accommodative side but dismissed comparisons with the 1970s, when sharp oil price rises triggered stagflation. Separately, in an interview with an Austrian paper, she said the ECB's June 5th rate signal had been understood.
"We find ourselves in a state of heightened vigilance. The financial markets and the public have interpreted our signal correctly," she told Austrian daily
Wirtschaftsblatt.